The automaker hopes the 27.5% tariff will eventually drop to 10%
- Volkswagen reported a disappointing second quarter as the company was hammered by tariffs.
- The automaker expects America’s 27.5% tariff to remain in place, before dropping to 10%.
- Both revenues and earnings were down, despite an increase in customer deliveries.
Volkswagen has reported their second quarter results and they reveal the company is being hammered by Trump’s tariffs. They’ve cost the firm a staggering $1.5 billion, which is even more than the $1.1 billion hit taken by General Motors.
In the second quarter, the Volkswagen Group delivered approximately 2,272,000 vehicles and made $94.8 billion in revenue. The latter figure was a decline of 3% compared to a year ago, and earnings before tax fell 32.9% to $3.9 billion. After tax earnings dropped 36.3% to $2.7 billion.
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Volkswagen noted a number of factors impacted their results including the aforementioned tariffs as well as “provisions for restructuring” at Audi, Cariad, and Volkswagen Passenger Cars. On top of this, the company mentioned expenses related to CO2 regulations, currency effects, and a higher share of fully electric vehicles.
As for why their net cash flow dropped, Volkswagen revealed they purchased an additional $1 billion in Rivian shares. Funds also went to tariffs and restructuring measures.
Volkswagen saw growth in Europe and South America, which “more than compensated” for declines in China and North America. The company also pointed to strong orders for the Audi Q6 e-tron, Cupra Terramar, Porsche 911, Skoda Elroq, and VW ID.7 Tourer.
Despite a few glimmers of good news, Volkswagen lowered their forecast for 2025. Their estimated operating return on sales has been revised from 5.5-6.5% to 4-5%, while the automotive net cash flow estimate has dropped from $2.3-5.9 billion to $1.2-3.5 billion.
Unfortunately, Volkswagen isn’t expecting much relief as they’re assuming the “current US import tariffs of 27.5% will continue to apply in the second half of 2025.” However, they’re hopeful a deal will eventually lower tariffs to 10%.
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